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7 Reasons to Worry About Next Week

Watch your step on the way down next week.

We were glued to our sets -- over a billion viewers worldwide, reportedly -- as 33 Chilean miners got pulled up to safety this week.

Chi-chi-chi! Le-le-le! Los mineros de Chile!

Unfortunately, too many stocks will be going in the other direction next week.

Despite the heady market gains in recent weeks, there are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names expected to sink on the bottom line next week.

Company

Latest Quarter's EPS (Estimated)

Year-Ago Quarter's EPS

Boston Scientific(NYSE: BSX)

$0.06

$0.12

Johnson & Johnson(NYSE: JNJ)

$1.15

$1.20

eBay(Nasdaq: EBAY)

$0.37

$0.38

Seagate(Nasdaq: STX)

$0.45

$0.58

Western Digital(NYSE: WDC)

$0.81

$1.25

Select Comfort(Nasdaq: SCSS)

$0.16

$0.20

Hudson CityBancorp(Nasdaq: HCBK)

$0.26

$0.27

Source: Thomson Reuters.

Clearing the tableThere will be more companies posting lower earnings next week, but these are just a few of the names that really jump out at me.

Boston Scientific makes pacemakers, diagnostic catheters, ultrasound systems, and other medical equipment. This should be an all-weather company. Health-care reform or not, tuckered-out tickers need pacemakers. Unfortunately, the pros see Boston Scientific earning half as much as it did a year ago. It's true that the company earned twice as much as Wall Street was expecting in its previous quarter, but that's unlikely to happen again.

Johnson & Johnson is the pharmaceuticals and consumer-goods giant. Sure, there's the "no more tears" baby shampoo and Band-Aid bandages, but J&J also is a big player in prescribed medicines, including ADHD treatment Concerta, and Doxil for patients with ovarian cancer.

Tuesday should be a rare miss for J&J. It has posted year-over-year gains on the bottom line in each of the four previous quarters.

If you didn't know any better, eBay would be a surprising name to see on this list. PayPal is the fast-growing online payment platform of choice, strong enough to help the company's namesake auction site overcome any of its many hiccups. Just a quarter ago, eBay grew its revenue and adjusted earnings by 15% and 18%, respectively. But there doesn't seem to be much of a bidding war when it comes to next week's report.

Seagate and Western Digital make hard drives. Despite the popularity of flash memory, computers still rely on the more traditional storage solutions provided by Seagate and WD.

Research firms IDC and Gartner both reported growth in global PC shipments this past quarter, so why are earnings shrinking at Seagate and WD? Well, an uptick in the number of computers is an incomplete prognosis. Are computers cheaper? Are component makers being forced into slashing prices to remain competitive? At least both companies are squarely profitable.

Select Comfort makes the Sleep Number mattresses that rely on its proprietary Sleep Number to establish the firmness of its air-chambered beds. Select Comfort was trading as low as $0.19 a share two years ago. It has come a long way to close at $6.85 yesterday. One would expect premium bedding to be a big winner during a recovery, but Select Comfort's only expected to earn $0.16 a share after ringing up a profit of $0.20 a share a year ago. Yes, it's earning roughly as much in a single quarter these days as its share price when it bottomed out in December 2008. Sleep on that!

Finally, we have Hudson City Bancorp. Karma isn't enough to save the regional banker this time. Yes, the financial services company scored some serious points by refusing to accept TARP money. It's a testament to the banker's ability to sidestep the industry's ugliest chapter, but it's still not expected to post bottom-line growth next week.

Why the long face, short seller?These seven companies have -- literally-seen better days. The market has rewarded many of these stocks with reasonable gains over the past year, but they still haven't earned those upticks.

The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. In other words, the bad news is already baked into the shares.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz wonders if his contrarian heart will ever be happy. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Author

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time with more than 20,000 bylines over those 22 years. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he splits his time living in Miami, Florida and Celebration, Florida.
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